What is Force majeure events?

In general terms, force majeure events are unforeseen events that halt the development of a particular task under a given span of time. Mostly, natural disasters like earthquakes, tsunamis, and floods are given the term 'force majeure events', which is used in contract law.

Recently, one such force majeure event is defending most of the businesses and governments. The covid-19 situation is considered as a force majeure event too. This article will discuss such events and how the parties (usually the party that is affected by the event) overcome them. It will also brief everything about typical force majeure events. 

Definition Force majeure events

Force majeure events is a French word that actually translates to acts of God. Now, as the name suggests, the acts of God are unpredictable and unforeseeable. As seen earlier, these events are used under the contract law. This applies to contracts that are dealt between two parties; this can be in between businesses, the government or individual people. When such an event hits, the performance of one party can slow down or sometimes stop. That is why the contracts contain a force majeure clause.

The technicalities are usually framed by one party. This can become a part of negotiation during the beginning of the contract period. The kind of events listed under this can vary according to the type of business contract. This also makes it clear on which side will face the consequences in case there is such an occurrence. 

Typical force majeure events 

A force majeure event is something that is not under the control of both parties in a contract. There may or may not be a stable allotment of investment for the business against such a situation. Typical force majeure events include quarantine, major disease outbreak storm, natural disasters etc. Issues like terrorist attacks/killings, wars, hunger strike, people protests, inflation are force majeure events too.

Basically, it is all the events that are not under the control of either of the parties that are involved in the contract. These events might put a stop to the contractual performance of the party. Instead, they oblige to the existing event and start looking for possible solutions for an alternative. This alternative may not be as effective as the party's previous performance. These are the possible scenarios of typical force majeure events.

How to tackle such events 

Handling force majeure events is extremely important as it cannot cause damage to the business. Any business should be prepared to face any unforeseeable event. There are a few strategies that can be used to tackle force majeure events. 

The clause

Before signing up for a contract with a party, always look for a force majeure clause. Take your time in looking at the complete contract and its details. 

Contents of the clause 

The force majeure provision should include the possible effects of the events on the business. This should be based on every thinkable force majeure event. The kind of events that might affect a particular business will vary. So, these can be segregated and listed in the contract. While analysing the contract, make sure to take legal help in formulating the best elucidations that will not disrupt the performance. 

Negotiation

Initiate the negotiation process with the fellow party as soon as possible. Conduct a meeting and discuss the clause. This is because one party can be more affected than the other. The force majeure events can take a major toll on either party. So, informing the fellow party in the contract about the effects of an event. This can include financial risks, disability to meet the time frame and so on. 

Precautions while entering contracts 

Taking the present situation as an example, we see a business running despite all the sufferings. For a successful partnership, a contract forms the foundation. This is because, once the event occurs, the performance cannot get affected drastically. Blaming the event for the upcoming resultant completely is not ethics either. So before entering a new contract, here are a few precautions. 

• The risk bearer in case of force majeure events should be understood through the contract. 
• The effect of the same can affect performance. The scale at which this will be affected may be predicted. 
• Assigning duties for each party that will be capable of handling such an event can be determined. 

This will create flexibility in the streamlined work schedule format of the business. The major causes of any force majeure event are reduced workforce, unavailability of raw materials and supplies, lack of transportation services and delay in work.

It is possible to solve these issues with proper negotiation and formulation of remedies. With these precautions, the production of a business will not be affected. As the analysis is already made during the contract, an event will not come as a surprise to the business. Even if the event is unforeseen, this will not cause drastic after effects.